In the first six months of 2018, ENEA Group generated PLN 6,040 million in net sales revenues. Electricity generation increased by 37% compared to the same period of the previous year. The Group’s EBITDA reached PLN 1,304 million and was in line with the plan on a YoY basis. ENEA Group’s half-year results were affected by high market dynamics.

The largest EBITDA, PLN 580 million, was generated in the distribution area, which also recorded the strongest growth (+12.2%). The second largest EBITDA result was posted in the generation area and reached PLN 437 million, i.e. up by 2.2% YoY. In H1 2018, electricity generation rose by 37%. This was the outcome of two opposite factors – on the one hand, there was an increase in the installed capacity following the acquisition of Połaniec Power Plant at the end of Q1 2017 and the commissioning of Unit No. 11 at Kozienice Power Plant while, at the same time, generation was reduced due to prolonged upgrade shutdowns of Units Nos. 9 and 10, also related to the adaptation of generation units to BAT conclusions. In the trading area, EBITDA amounted to PLN 29 million, as compared to PLN 105 million in the corresponding period of 2017. This resulted from the dynamic market situation, especially in respect of green obligations and CO2 emission allowances. EBITDA in the mining area stood at PLN 274 million vs. PLN 321 million in the previous year. This is the effect of temporary and already remedied geological and hydrotechnical difficulties which took place in the first quarter of this year.

ENEA consistently pursues the objective of increasing sales of electricity to end users. In H1 2018, compared to the same period of 2017, there was a significant rise in the volume of electricity and gas fuel sales to retail customers by 1.1 TWh, i.e. up by 12%. The total increase in sales volumes translated into an increase in sales revenues by PLN 241 million, i.e. up by nearly 12% on the corresponding period of 2017. Sales of heat also increased in this period and reached 3,824 TJ (up by 12% YoY).

In the first half of the year, the Group generated 12.8 TWh of electricity (an increase of 37% YoY), of which 11.9 TWh came from conventional sources. In May, Unit No. 11 at Kozienice Power Plant underwent a planned warranty inspection, which fully confirmed its high efficiency. In the reported period, the unit generated a total of 2.4 TWh of electricity.

In H1 2018, ENEA Group increased generation from renewable energy sources (RES) by 49 GWh. Sales of distribution services to end users reached 10 TWh, i.e. up by 4% compared to the same period last year. The Group spent PLN 824.4 million on capital expenditures (including PLN 60 million on pro-environmental investment), with the net debt/EBITDA ratio remaining within the safe range at the level of 1.8.

In Q2 2018, LW Bogdanka (LWB) generated sales revenues of PLN 457.3 million, i.e. up by 4.7% YoY. The company’s EBITDA increased by 8.9% to PLN 151.1 million. Although the operating profit dropped by 14.2% to PLN 49.5 million on last year, the net profit was only slightly (by 1.6%) lower than in Q2 2017 and amounted to PLN 43.2 million.

LWB’s consolidated revenues in the first half of the year amounted to PLN 856.0 million (down by 5.1%). The consolidated EBITDA dropped by 12.6% to PLN 278.6 million, the operating profit was lower by 47.1% and reached PLN 78.0 million, while the net profit dropped by 40.8% to PLN 66.4 million. The half-year results were greatly affected by Q1, in which, due to geological and hydrogeological factors, LWB recorded lower coal production and sales.

In H1 2018, LW Bogdanka maintained the production volumes of steam coal at a level similar to the year before – it amounted to 4.5 million tonnes and was 0.9% lower than the year before. Production of commercial coal increased by 13.5% to 2.42 million tonnes. At the same time, coal sales increased by 4.4% YoY to 2.37 million tonnes. The average yield in Q2 2018 was 62.3%, compared to 68.3% the year before.

After H1 2018, LWB’s share in the steam coal market in Poland was 18.4%, whereas the share in the coal supplies to the power industry reached 24.7%. Over 82% of sales generated in the first half of this year were executed for ENEA Wytwarzanie and ENEA Połaniec.

COMMENTS ON THE H1 2018 RESULTS OF THE ENEA GROUP:

Mirosław Kowalik, President of the Board at ENEA:

– The Group strengthens its market position thanks to the stable financial situation and better operating results, including the increased electricity generation. The strong dynamics of the domestic market had an impact on the Group’s financial and operating results, but they are in line with our forecasts. We recorded a significant rise in production and sales of electricity to retail customers, as well as an increase in the sales volume of distribution services. We are developing in a sustainable manner, consistently implementing our investment programme across the value chain. In the first half of the year, the Group spent PLN 824.4 million on CAPEX, of which PLN 60 million was incurred on pro-environmental projects (e.g. upgrades of two units in Kozienice Power Plant and one in Połaniec). Our investments are planned to reach over PLN 2.5 billion by the end of the year. The Group’s stable generation capacity ensures the security of electricity supplies to our customers and the Polish power system, and at the same time creates an opportunity for further transformation of the sector towards renewable energy.

The future of ENEA Group lies also in electromobility, to which we have already strongly committed ourselves. We cooperate with Kolejowe Zakłady Łączności (KZŁ) – ENEA Serwis is a certified distributor, installer and repairer of the charging station network for electric vehicles. Together with the National Centre for Research and Development and other energy companies, we are part of the "e-VAN" programme, whose goal is to develop an innovative zero-emissions delivery van – said Mirosław Kowalik, President of the Board at ENEA.

Piotr Olejniczak, Vice-President of ENEA for Financial Affairs:

– The financial results generated by ENEA Group are according to our expectations and our EBITDA is in line with our year-on-year plans. In the first six months of this year, we were under the pressure of the highly dynamic market situation. The decrease in EBITDA in the trading area is the result of the growing costs of environmental obligations and CO2 emission allowances. Nevertheless, the Group’s financial position remains invariably safe owing to the achieved results and the prudent use of debt. Thanks to the consistently maintained cost discipline, we are able to implement our investment plans covering, primarily, the areas of generation and distribution – commented Piotr Olejniczak,Vice-President of ENEA for Financial Affairs.

Piotr Adamczak, Vice-President of ENEA for Commercial Affairs:

– The increase in energy generation is closely followed by an increase in the volume of energy sales to retail customers. Over the last 12 months, i.e. from July 2017 to June 2018, ENEA Group sold 19.1 TWh of electricity to end customers. Our strategy assumes that by 2025 these sales will have reached 20.1 TWh. ENEA Group’s total sales revenues are also on the rise, with a 12% increase recorded in the first half of the year compared to the same period last year. In addition to the expansion of our product offering, based on innovation and new technologies (ENEA Smart, ENEA Eco), we strive to maximise the effectiveness of our customer service activities. We are working on launching an updated version of the eBOK online application, where our Customers can check the invoice balance due, pay bills and contact ENEA in every case without having to visit a customer service point. On our hotline, we have launched a self-service programme – on average, 37% of customers connecting to the hotline handle their issues without speaking to a consultant – stated Piotr Adamczak, Vice-President of ENEA for Commercial Affairs.

Zbigniew Piętka, Vice-President of ENEA for Corporate Affairs:

– We are upgrading power units in our power plants to increase their efficiency and effectiveness, while at the same time adapting our generation units to the requirements of the Industrial Emissions Directive and BAT conclusions. In May 2018, works were completed on Unit No. 10 at Kozienice Power Plant. The upgrade of Unit No. 9 is still in progress. Until the end of 2018, upgrades of the boiler house and the engine house are also planned, and all works on Unit No. 9 are scheduled to be completed in the first half of 2019. In Połaniec Power Plant, we have decided to resume the “Phoenix” project. The project, suspended by the plant’s previous owners, helped increase the efficiency and life cycle of five power units. For Unit No. 5, NTPs have already been issued to commence work on the modernisation of the turbine and the generator as well as the delivery of a new unit transformer – added Zbigniew Piętka, Vice-President of ENEA for Corporate Affairs.

Artur Wasil, President of Lubelski Węgiel Bogdanka:

– The fact that in the first half of the year we maintained the extraction volume at a similar level to last year’s, despite the difficult first quarter, testifies to the mine’s high technical and organisational potential. It is worth noting that at the same time we also kept up the high pace of preparatory works for extraction in subsequent periods – in the second quarter, we carved out 10.8 km of galleries, as compared to 6.9 km the year before. Thus, an increase of as much as 56.5% was recorded. In the entire first half of the year, the length of completed excavations increased by over 31%. We uphold our year-round production and sales plan at the level of not less than 9 million tonnes – assured Artur Wasil, President of Lubelski Węgiel Bogdanka.

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